Trade & Globalization

By Robert Atkinson, President, Information Technology and Innovation Foundation

July 5, 2011

Things are not working. Two years after the National Bureau of Economic Research (NBER) declared the recovery underway, it is clear that things are not working, at least not in the sense that most Americans expect. The U.S. economy is like an aging sports car running on three cylinders, fouled spark plugs and a flat tire.

The U.S.-Colombia Free Trade Agreement, stalled in Congress since the George W. Bush Administration signed it in 2006, is likely to be voted on by legislators this summer as part of a broader trade package that also includes the pending pacts with Panama and South Korea.

The myth of the smug teetotaler is no joke. Many of the most popular theories of economic growth in wealthy countries, dating back to the Protestant work ethic of Max Weber, emphasize the abstemious and sober virtues of the well-to-do. And from the 18th-century Gin Acts in Britain to Prohibition in 1920s America to a certain class of modern-day economists, there's a long tradition of blaming intemperance for the persistence of poverty.

Does China’s rise strengthen the existing international order or overturn it? How we perceive and react to China’s rise will have dramatic consequences for Sino-American relations and China’s role in the world. Whether we see Beijing as a friend, a challenger, or whether those labels engender a false choice is critical to how we develop the right foreign policy for a rising China.

Watch Ely Ratner and Steven Weber in their discussion on how we should approach U.S.–China relations during this period of great power transitions.

Flannery O’Connor once described the contradictory desires that afflict all of us with characteristic simplicity. “Free will does not mean one will,” she wrote, “but many wills conflicting in one man.” The existence of appealing alternatives, after all, is what makes free will free: What would choice be without inner debate? We’re torn between staying faithful and that alluring man or woman across the room. We can’t resist the red velvet cake despite having sworn to keep our calories down.

The Chinese premier Wen Jiabao is not a man given to revolutionary rhetoric. He normally speaks in the dry, careful language characteristic of Beijing's leaders. But six words he uttered last week could have revolutionary consequences for China, the world, and the Middle East.

Did he comment on Libya's civil war? On rising oil prices? On Middle East unrest? None of the above. In fact, he simply made a matter-of-fact declaration about China's future economic intentions. Here were the six words: "We will actively boost consumer demand."

Michele Wucker, president of the World Policy Institute and co-sponsor of the World Economic Roundtable, guest hosted Worldwide Exchange this morning and spoke about her recent paper advocating for a voluntary debt restructuring in Europe.

President Obama's budget speech was one part Obama, one part Clinton, one part China. The Obama part came at the end. It was a gesture toward recapturing the image he enjoyed between 2004 and 2008: As the guy who didn't hate and wasn't hated, the guy who could help red and blue America get along. "This sense of responsibility—to each other and to our country—this isn't a partisan feeling," Obama declared. "It isn't a Democratic or a Republican idea. It's patriotism."

-- This is a guest post by Jay Pelosky, Principal, J2Z Advisory, LLC -- When one considers Q1 2011 results: broad commodities up 12%, led by oil up 24%, S&P stocks up 6% in its best Q1 since 1998, USD down 4%, one asset class stands out and that is bonds - bonds were roughly flat across both the corporate and government space in Q1, even in the face of sharply rising commodity prices and inflation fears.